Daily digest market movers: Gold price falls slightly amid caution ahead of Fed meeting
- Gold price turns subdued near $2,150 as investors await key interest rate meetings by various central banks this week. The near-term for the Gold price will be guided by the Federal Reserve’s monetary policy decision.
- The CME FedWatch tool shows that a steady decision for the March meeting is certain. Market participants will keenly focus on the dot plot, which indicates all policymakers' expectations for interest rates over time and the latest economic projections. Investors will look for cues about when the Fed could start cutting interest rates.
- December’s dot plot showed policymakers don’t see the need to increase interest rates further and see three rate cuts this year. The Consumer Price Index (CPI) and associated inflation indicators for the first two months of 2024 have not been supportive of three rate cuts, as Fed policymakers want price pressures to decline for months to become confident that inflation will return to the 2% target. This could result in fewer rate-cut projections from Fed policymakers.
- Meanwhile, market expectations lean towards the June policy meeting when the Fed will start reducing key borrowing rates. However, the chances for the rate cut in June have come down significantly, as the consumer and producer price indices were surprisingly stubborn in February. The CME FedWatch tool shows that the chance for a rate cut stands at 57%, down from the 72% recorded before the release of the inflation data.
- Later this week, investors will focus on the preliminary S&P Global Manufacturing PMI for March. The Manufacturing PMI is anticipated to fall to 51.7 from 52.2 in February.
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